Kraft to Make Oscar Mayer, Pizza, Separate Units

Kraft Foodsplans to turn Oscar Mayer meats into a separate business unit as part of a change the largest North American food company hopes will make all its businesses more accountable, a spokeswoman said Thursday.

The overhaul of reporting lines will break Kraft's five North American business sectors into eight business units, spokeswoman Lisa Gibbons said.

Those units are beverages, cheese, pizza, snacks and cereals, Oscar Mayer, food service, grocery and Canada, she said. The restructuring is planned to take place in early 2008.

The company also plans a similar restructuring of its international business, largely along geographic lines.

"We really feel like this is all about creating accountable business units," Gibbons said.

In February, Kraft said its plan under Chief Executive Irene Rosenfeld was to "rewire" the company for growth.

Separating out Oscar Mayer could highlight a business analysts have often said the company might sell. But Rosenfeld said in an interview with Reuters earlier this year that the company was "pleased" with Oscar Mayer's performance in the past two years.

In 2006, Oscar Mayer sales rose more than 8 percent to about $3 billion, compared with less than a 1 percent increase to $34.4 billion for the company as a whole.

But the business is also facing increasing competition, with meat processors such as Tyson Foods Inc. and Smithfield Foods Inc expanding offerings.

Edward Jones analyst Matt Arnold said separating Oscar Mayer out could just mean the company wants to highlight its performance.

"They are trying to put something right in front of investors noses," he said.

Kraft shares were down 3 cents at $34.26 in afternoon trading on the New York stock Exchange. The stock is down 4 percent this year, compared with a 4.7 percent rise for the Standard & Poor's packaged foods index.